SENTRE of Real Estate

August 31, 2013

Union-Tribune

By Roger Showley

SENTRE Partners, a San Diego firm that owns and manages commercial space in Southern California and Mexico, is looking north and south for new opportunities, particularly apartments, says its newly named president, Douglas M. Arthur.

To the south, Arthur said the company will search for a Mexican partner to develop rental projects.

“It’s a segment we’ve been exploring down there, but not to the extent of what’s on this side of the border,” Arthur said. “We’d be an active investor on someone else’s platform,” he said.

Just as it partnered 20 years ago with Vesta, a Mexican industrial contractor and developer, SENTRE will likely identify equity investors who might underwrite a Mexican developer. It sees continuing growth in Mexico as manufacturers move back to North America from China and expects a rising middle class will desire more- upscale housing.

While laying out no specific timetable, Arthur said the first step will be to understand Mexico’s rental market and then use existing Mexican partners to explore possibilities of both buying and building apartment complexes.

“Historically, we’ve invested in San Diego County and outlying areas to San Diego County,” Arthur said, including Orange County, Los Angeles and the Inland Empire of Riverside and San Bernardino counties. “We like the (Portland) market, the fundamentals are strong.”

He said competition is less fierce than in San Francisco and Seattle, which have drawn interest from Southern California developers and investors.

SENTRE — which stands for “stewards and entrepreneurs of real estate” — currently employs about 40 staffers and owns or manages about 3 million square feet worth more than $500 million — office, industrial and retail projects and two apartment projects, virtually all within the county’s borders.

Arthur, 32, said the local focus continues to be investing in existing office and industrial properties and looking for institutional investments for the GE Pension Trust and other partners SENTRE has worked with previously.

SENTRE’s three principals, cofounder Stephen B. Williams, Michael Peckham and Spathas, have long been active in the downtown office market and Arthur said that focus will continue.

“We’re big believers in downtown, always have been,” he said. “We’ve participated more in high-rise offices than any other type. We still like downtown and like the way it’s evolved more into a more complete submarket with live, work and retail or play components. I like some of the multifamily opportunities, as well.”

But he said SENTRE also could look elsewhere for mixed-use development opportunities after successfully building 25,000-square-foot Harbor Point, an office and retail development on North Harbor Drive in Point Loma that was built on land owned by Peckham’s family.

“I think we aided in the gentrification of that coastal, Point Loma, sought-after location,” he said.

Asked about developing near mass transit lines, Arthur said Harbor Point did not offer that proximity, but noted that it’s only a short walking distance to the bay and a variety of restaurants and hotels. Tenants and residents at the building don’t need their cars and can use on-site showers after taking a jog in the neighborhood.

“We’re big believers in exactly that — creating an environment where you’re not as dependent on a car as you are in suburbia,” he said.

Spathas picked up on that theme in saying young workers coming out of college work differently and don’t pine for the perks of traditional offices, like the corner suite. Besides, he said, much work can be outsourced abroad via the Internet, and that trend will affect the demand and design of future office space.